It’s official.
The Ft says so. Weather (risk) is a real market:
Peter Brewer, fund manager for the Cumulus Weather Fund, says weather derivatives are an attractive investment proposition.
“I think it’s a perfect market. You can’t spook it, you can’t manipulate it. You can’t make people think it’s going to be 110 degrees in London next week,” he says. “And of course, weather is absolutely uncorrelated [to other asset classes].”
…
That development has left enthusiasts such as Pablo Triana [a professor at Madrid‘s Instituto de Empresa and an expert in weather derivatives] arguing that the market has the potential to be the biggest in the world. “Anything is possible, because there’s no weather risk you can’t hedge,” he says.
The article goes on to talk about WeatherBill and quotes David Friedberg:
“Our mission is to remove the risk of weather from all businesses, for all needs and all purposes,” chief executive David Friedberg said, adding that “no contract is too small. We’ve sold a weather derivative contract for a dollar”.
Mr Friedberg’s clients include car wash companies, hair salons and golf courses. “I’m also on the phone to farmers all the time,” he said. “The other day one farmer rang me up and said his sows wouldn’t make a move to mate if the temperature went above 95 degrees Fahrenheit. He wanted to hedge against that.”
